so if your not rich earning 60k a year?

it’s perhaps not as widespread as it feels when you’ve done inner city yoof work/probation work and had the hapless task of trying to find some of these kids gainful employment!

I share your pain however most had obvious “issues” such as poverty, stupidity, poor upbringing, shitty area, bad peer group,crap parents etc
It had its causes and yes there are lots of them out there.

It’s funny how the sharp global increase in people who “cannot be bothered” to work exactly coincides with when the bankers globally screwed up the economy.

And although the long-term unemployed is now at a 20 year high, which of course coincides when the Tories were last in power – it’s funny how many people get lazy when the Tories are in government, most unemployed people are not long-term unemployed, so are obviously perfectly prepared to work. Which exposes as a lie the claim that “millions of people choose not to work”.

Unless of course this Tory government is telling barefaced lies about the unemployment figures, which I’m not aware the Daily Mail is claiming.

£1m+ base salary ? I’m used to working in/around high earners in finance and law but very few of them make more than £500k base and the majority much lower even if their total compensation is above £1m

Sorry, “salary” was a bit misleading for two of them, compensation would probably have been better, they’re equity. Definitely not unusual at all for the big guns at good firms. The third guy was one of ours and a stalwart of our parent company board (but to be honest I have no idea how his remuneration is structured, only that it’s sky high).

Equity partners in all the magic circle firms can expect to take home between £1m and £2m each, with lawyers at Slaughter & May particularly well off.

ernie_lynch – Member
when the bankers globally screwed up the economy.

Gordon Brown failed in so many respects but his one great achievement (sic) was his ability to get intelligent people to believe this line. Banks were one of the many players responsible for the crisis but they were far more a symptom rather than a cause of the problems. Through the role that they play and they inherent (and massive) leverage involved in their business model they reflect and magnify the errors of others. But as Santayana (and Churchill) noted, “those who cannot remember the past (accurately), are condemned to repeat it.” So what do we have now? The same mix of excess liquidity and artificially low interest rates, banks, household and countries with too much debt/leverage, and the financial prudent penalised. Beware the reflection of this mess seen in global finance again.

And although the long-term unemployed is now at a 20 year high, which of course coincides when the Tories were last in power

…..after a period of successful or unsuccessful economic management?

Current high levels of unemployment across Europe are hardly the result of one party’s politics as appealing as that idea may seem!

The Tories make many mistakes Ernie, including the ones that I highlight in my previous post! So sorry that cliched Tory supporter li(n)e falls equally flat I’m afraid. But to argue that the global recession was caused solely by banks is a gross distortion of the truth. So hardly a surprise that poltiticians use it so much. It was a brilliant poltical ploy that by the looks of things worked pretty well. As I said seemingly intelligent people fall for it regularly….

Well of course the global recession wasn’t caused solely by bankers, they could not have done it without the help of politicians who let them get away with their greed and incompetence, whether in Washington, London, or Berlin.

Their credit crunch cock-up caused unemployment levels to rocket, or, “lots of people to suddenly become lazy” if you’re a Tory.

I’ve had first hand experience of people on benefit turning down work as they cannot be bothered.

I dont think anyone said it never happened just that it is not typical no matter how many anecdotes you provide
As for a “reason” to turn down a job there are none allowed and their benefits would be stopped – this is not an anecdote simply the benefit rules/fact.

Banks were one of the many players responsible for the crisis but they were far more a symptom rather than a cause of the problems.

Indeed capitalism is just the cycle of boom and bust and it is an inherent facet of it as a quick check of economic history will show you. I assume you dont wish to repeat the mistakes of the past so you would like an alternative system?
As far as i am aware the consensus view is the sub prime lending market collapsed in the US – iirc this is banking- and caused the crisis. The symptom claim is less than accurate [ unless of course you accept capitalism is fundamentally flawed and I doubt you do] so they were somewhat more than a symptom – unemployment is a symptom.
To suggest banking was a symptom is largely untenable but of course they did not do it alone.

Economies move in natural cycles pure and simple. A simple analysis of how and why main policy goals conflict over time (growth, employment, inflation, balance of payments etc) shows why this inevitable.

The amplitude of these cycles varies over time. Boom and bust is not inevitable.

There has been a long debate regarding whether and how governments should intervene to manage these natural cycles.The mid part of the 20c was characterised by cross-party support that governments can and should intervene but the results were disappointing (you are young enough I think to recall “stop-go”). The latter part of the 20c and early this century saw a shift towards less government intervention again with mixed results.

Gov intervention has largely been based around (a misunderstanding?) of Keynes. As Balls pointed out, Keynes is not synonymous with (reckless?) increased gov spending. Indeed it is quite the opposite. Put v simply, K believed that (* see below) that you should attempt to run budget surpluses in good times (reducing the upside) so that deficits can be run in the bad IME (to reduce the downside). So far, so good.

The ultimate folly of Gordon Brown/Ed Balls was to ignore this and to arrogantly claim the end of boom and bust. Instead of moving towards lower deficits, they did the opposite. One result was very unbalance growth on financial services and public sector.**

So when the inevitable slowdown came, the Keynesian response card had largely been played. Oopps! How JMK must have been turning in this grave. So with fiscal policy neutralised, what was left? Ultra loose monetary policy.

So the Tories implement this response at a time when the main transmission mechanism (the banking system) was still screwed. Hmm, so where does all that excess liquidity go? Productive assets? Hardly….

* Actually the irony of ironies (repeated throughout history!) is that the Tories have turned out to be more Keynesian than labour. Why? Keynes did not advocate using fiscal policy first and foremost. Securing lower borrowing costs, to stop defaults from spiralling upwards, was far more important. Without that, there was a real danger more government borrowing would “crowd out” the private sector. Funny that – Osborn turns out to be more of a Keynesian that Balls!

** to be fair, Gordie does get “brownie” points for recognising that fixed exchange rates amplify economic cycles rather than reduce them.

those subprime mortgages were repackaged and sold off by hedge fund managers who chopped them up and sold them again
they were motivated purely by greed, the lure of the bonus over ruled any sort of logic

when the mortgage defaults became a problem everyone asked the hedge fund managers what these debts were worth, none of them knew what the products theyd devised and sold were actually worth so all banks became paralysed and refused to lend to anyone

so everyone suffers (apart from those that got all those bonuses in the 1st place)

greed and deregulation are to blame, the banking industry pushed for dergulation in mortgages, trading etc etc and their pocket politicians gave them what they wanted

….the current financial crisis as being caused at two levels: by global macro policies affecting liquidity and by a very poor regulatory framework that, far from acting as a second line of defence, actually contributed to the crisis in important ways. The policies affecting liquidity created a situation like a dam overfilled with flooding water. Interest rates at one per cent in the United States and zero per cent in Japan, China’s fixed exchange rate, the accumulation of reserves in Sovereign Wealth Funds, all helped to fill the liquidity reservoir to overflowing. The overflow got the asset bubbles and excess leverage under way. But the faults in the dam – namely the regulatory system –started from about 2004 to direct the water more forcefully into some very specific areas: mortgage securitisation and off-balance sheet activity. The pressure became so great that that the dam finally broke, and the damage has already been enormous…..

….The crisis originated from the distortions and incentives created by past policy actions. When economists talk about causality they usually have some notion of exogeneity in mind; that relatively independent factors changed and caused endogenous things to happen – in this case the biggest financial crisis since the Great Depression. The crisis itself was not independent, but originated from the distortions and incentives created by past policy actions.

Symptoms or causes? You decide!

kimbers – Member
the banking industry pushed for dergulation in mortgages

The alternative view is that the banking industry responded to changing regulation and business model of Fannie and Freddie and to changes in risk weighting (sic) of mortgages under new Basle regulations. Symptoms or causes…..

@ernie I don’t think there has been a sharp increase in those who cannot be bothered to work since the crises, I think the problem has existed for a long time it’s just more clearly in focus now as we cannot afford the welfare payments.

Very very many people benefitted from the (too) cheap credit that was available. For every bad loan made by a bank there was a willing borrower, be that individual company or government. You cannot say it was purely corporate or banker greed, there were jusy as many if not more greedy indiviudals or over extended themselves. We are now returning to a more normal situation which is painful. As a nation we were living on credit and far too reliant on financial services.

Yet we have natural cycles ? these being boom and bust basically.
Its what history tells us happens but you can keep thinking we just need to tweak it right to stop this ever happening again. What was that about not learning from history and repeating the mistakes?
Boom and bust is clearly what happens in a capitalist/mixed economy.
Can I do a graph please 😉
Analysing the causes the fault will always be a mixture of regulators failing and markets messing up. However it also suggests they can get the balance correct which they cannot.
GB claimed to have ended boom and bust for example – to be fair GO could claim this as he has achieved continual bust 😛 [ is not a serious debating point]

why did the sub-prime market exist in the first place? And why it collapse?

I dont think anyone forced the bankers to lend their money on NINJA* deals – currently no amount of govt policy has encouraged them to lend even when we are giving them the money to do it. i reckon the greed/stupidity of bankers – what do you think?
It collapsed because the people could not re pay which is no real surprise and the knock on effects [ as kimbers notes] were large.
In essence the bankers were pretty crap at their job we all paid and some folk blame politicians in another country for it.
* NINJA = No income, No Job, No assets.

@ernie I don’t think there has been a sharp increase in those who cannot be bothered to work since the crises, I think the problem has existed for a long time it’s just more clearly in focus now as we cannot afford the welfare payments.

Very very many people benefitted from the (too) cheap credit that was available. For every bad loan made by a bank there was a willing borrower, be that individual company or government. You cannot say it was purely corporate or banker greed, there were jusy as many if not more greedy indiviudals or over extended themselves. We are now returning to a more normal situation which is painful. As a nation we were living on credit and far too reliant on financial services.

Pretty much how Robert Peston described it recently in that series he did about shopping. I think the greed culture extended to all levels of society. But the question we should be asking is, who created that culture? Those who stood to make short term gains from it, and were not looking to the long term or gave a toss about benefits to society.

@ernie I don’t think there has been a sharp increase in those who cannot be bothered to work since the crises, I think the problem has existed for a long time it’s just more clearly in focus now as we cannot afford the welfare payments.

And yet despite the very high levels of unemployment due to the international economic crises caused by greedy and selfish bankers, JSA is only a very small part of welfare spending in the UK, far more is spent subsidising employers who pay shit wages.

So if you are serious about reducing welfare spending I suggest you start off by insisting that crap employers pay living wages.

….despite the fact that UK plc has continued to hoard not shed labour leading to a decline in productivity levels. Not quite what shareholders have in mind but then again the reality probably makes less exciting headlines than “crap wages stuff.”

Not to mention where the best trends in wages are to be found….and under a Tory Goverment – irony 3 of the day!

how about
Yes afair point working tax credit does subsidise dividends by keeping wage demands low however they are currently loosing out due to productivity …we are all in it together 😛
[ you can add punctuation if you really must 8) ]

Disposable incomes have fallen since the start of the economic downturn, with average equivalised income falling by £1,200 since 2007/08 in real terms. The fall in income has been largest for the richest fifth of households (6.8%). In contrast, after accounting for inflation and household composition, average income for the poorest fifth has grown over this period (6.9%).

The result is that income inequality has fallen in the past two years. Not a great headline for the Morning Star I know!!!

As a socialist you would know the problem with falling productivity. If you push for higher wages without increasing productivity what is the result? Fewer people in work earning higher wages. And the implication for income inequality?

To be fair I think they are more likely to answer a direct question than you are. For example one thing we be absolutely certain about is how any one of those politicians would vote in a general election if one was held tomorrow.

You on the other hand, despite being a major contributor on political threads, refuse to answer that question, realising that by doing so you would completely undermine this absurd pretense which you try to maintain that you’re not a Tory.

.

The result is that income inequality has fallen in the past two years.

Your figures is for the richest fifth, mine was for the one percent. And even if the income of the richest 20% fell by 0.1% more than the poorest 20% in the last 2 years, its hardly going to reverse 35 years of growing economic inequality ffs 🙂

Cheers Ernie, if there is one certain relationship it’s between the strength of conviction and the need to resort to ad Homs! But feel free to update your compelling data after 05 while digesting the fact that the UK’ Gini coefficient is at the lowest level since 1986.

The top 1% have continued to prosper even through the economic crises caused by the bankers. But you want to ignore that and talk about the top 20% instead.

Yes the affluent professional middle-classes might well have seen a very slightly greater fall in income than the bottom 20%, 0.1% apparently, but that’s hardly surprising is it ffs. In times of severe economic crises you always get the “squeezed middle”, it’s nothing new. Mostly for the very obvious reason that those at the bottom can’t go a great deal lower.

None of that detracts from the fact that for the last 30 plus years, since the neo-liberal experiment started, there has been dramatically growing incomes inequality, something which is well documented but you choose to deny to suit your Tory agenda.

For a more up-to-date assessment (since according to you what has happened for most of the last 30 plus years ago doesn’t count) from 6 months ago :

But it’s hard to find this graph still on the organisation’s website or in its 190 page report. However, their conclusion section and especially page 155 is worth reading as it correctly identifies that not only are these global trends but also that they are far more complex than some may like to argue! Then try the OECD report on global inequality and why it transcends political and economic structures.

EL you might like to re- read my link. The average income of the lowest 20% of the population has INCREASED by 6.9% since 2007/8 whereas that of the top 20% has DECREASED by 6.8%. So your 0.1% difference (with the accompanying FFS) may well need some adjustment!?!

Nice report from the Rowntree Foundation BTW. Shame that Ed didnt include the recommendations on page 156 onwards, he really might have been making an impressive speech then! Sleep well!